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Paul Krugman & Joseph Stiglitz Education. (2012) A conversation on the state of the economy. New.

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United States 15, Us 13, Jane Robinson 7, Carol Rasco 5, U.s. 4, China 4, America 3, Scandinavia 3, Georgia 3, Martha 2, Washington D.c. 2, Europe 2, Ms. Robinson 2, Paul 2, Carol 2, Germany 2, Canada 2, Rasco 1, Carol Hampton Rasco 1, Ms. Rasco 1,
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  CSPAN    Book TV    Paul Krugman & Joseph Stiglitz  Education.   
   (2012) A conversation on the state of the economy. New.  

    November 24, 2012
    11:00 - 1:00am EST  

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definition he is modal and he has been filtered for four years but mitt romney, was the extreme or filtered? >> guest: clearly unfiltered. one term as governor of massachusetts. in historical perspective not a lot of time in politics. had he won the presidency would have been second only to wilson and arguably grover cleveland depending on how you look at it in terms of the shortness of his political career before he became president. >> host: okay, listen. thank you. this is a fascinating book and it looks at a lot of stuff that you know but tells you stuff you don't know about it. thank you very much. >> guest: thank you very much. ..
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[applause] >> they give you very much to the fashion institute of
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technology for hosting this event and also i am very excited to see two people who are unquestionably the most exciting economist in the world today. [applause] in addition to the most reference and both nobel laureates i have to say from the vantage point* of economic thinking that if i were to nominate two people to be the most courageous economists, they would be mine. [applause] as you know, they have
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written a book that pertains to our current thomas's and circumstance. joseph stiglitz, "the price of inequality" and paul krugman, "end this depression now." therefore on behalf of them i will thank you for your patronage. paul, the title of your book, "end this depression now" what agencies do human beings have? >> >> i spent a fair amount of time looking at the great depression. i see something that is the same type of animal. not as bad as the great depression is our slogan but it is pretty bad and
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directed nuys that technology is still there the human skills are still there but we're not making use of them. similar to the 1930's people make the argument there were no easy answers or quick fix and it was absurd to think you could quickly get out of this that all we need an increase of their misspending and there are articles explaining it is a fundamental problem and if you want to make progress with structural reform then along came not the war but the united states began preparing and within two years employment had
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increased by 20% stuff like that. the old problem was not enough spending in the economy. one player that should have been spending more was the government thinks to adolf felt hitler they did but they should have been doing to increase spending. there is overwhelming confirmation and this is a time to have the government spend more would pit -- but people to work and put capital to work it is hard politically because it is hard to persuade people which is why some of us write books. [laughter] >> host: someone argue with you to say you do the
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spending big issue of boost then you fall back. but we did not to. what happened? >> that is interesting story. a lot of people just like montgomery ward was a major store chain. but the major -- but he believed they would come back so he hoarded cash waiting for the depression to come back by the time it was clear they lost their position in the marketplace. is not steadied as much as it should have been but that story of what is going on is about excessive practice with the debt bubble and it
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burst leaving people stranded with too much debt. what happened during world war ii with a period of lower employment plus a significant amount of inflation so you come into world war ii with a high of lovell's of household debt and by the time the war was over it was well under what they had been so you saw the problem. it the problem is excessive indebtedness you want a strong economy. some people have a chance to pay down the debt. it is not a sugar high but
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essential nutrients. >> there are other factors like poor savings and that meant after the war people had very strong balance sheets they could spend that the same time part of the problem of the great depression we had to move people from agriculture we had then a success on the 19th century then we still had people working and farming and today we have 2%. we had to move them into manufacturing rural to urban. but with the war they had to
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because that is where they had to go. we began to equip people for the new middle of the century industrial economy. then we have the g.i. bill to give them the education that made them students for the new economy. not only the government was spending but it was restructuring making a prepared for the post war period. one interesting book is a in the period of the thirties the government was doing investment in growth and after the war that increase the return of investment so
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it created a context so we had to back off with public spending to provide context where it had a higher return. >> in general we have the notion public and private are always in competition. a lot of things people will do they believe there is adequate transportation network if they will have skilled workers available so i think if you strip it down to the amenable story but of course, we have governments
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canceling infrastructure projects which is exactly the opposite how we got out of the great depression. >> year of talks about austerity but we practice it. >> 700,000 fewer public employees if we had a normal expansion we would have gained 1.2 million employees. there is a big gap caused by this austerity. the real danger is if romney is elected. [laughter] they might actually do what they say they will. [laughter] >> your best hope it is one
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of the candidates is lying through his teeth about his plans. [laughter] we sit now what you'll slide prolonged stagnation. you wrote a book on inequality. this could not be a positive development to have the reserve army of the unemployed to weaken the bargaining power. >> inequality has become a serious problem in the united states. we have been arguing and long time. even the economists realizes it is a serious problem. when they say at you have to believe that. [laughter] the magazine's not our colleague. [laughter] >> host: you take them on.
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the problem now is lack of demand and that means people of not buying as many goods that leads to unemployment. the people at the top save 15% of their income the people at the bottom spend everything they need to to get by. it lowers total aggregate demand. there is now a vicious cycle with the high and employment this year wages is brought down that in turn before the
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crisis the median income was not doing well is lower today they and a decade and a half ago. there is a vicious cycle where a weak economy leads to more inequality to a weaker economy. >> i am not totally persuaded by the fed chairman even now this still well below what it was. there is something.
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inequality leaves many people to attempt to make the middle class living. but i am not sure it is more than just a simple mechanical. >> a lot of the discussion talks about the american consumers coming back. the savings rate was zero. we hope it will not come back. as my predecessors said that was not sustainable. >> cannot go on forever then it will stop. [laughter] >> but the point* is if you
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roughly divide the population upwards of 20% to then historic way to take 15% of their income they now have 40%. do the arithmetic that means we should expect a 6% savings rate. so in some sense savings are depressed compared to what we would have expected such as people get adjusted to a new standard of living we will see savings rates increase at the 4.5% level why we should be worried over the long recession that these forces on their own are weak. >> host: in regard to any quality, taco bell the slump
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what other dimension do see? >> there is a lot of causes. what is going to the top the increase of the number of people in poverty. each has their own cause and multiple causes. at the top to get a lot of attention when of the factors even the economist is now recognized, a lot from the top is from the news like monopoly power
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where people try to grab of larger sale bitmap part of the pie. when he gets his profits by reducing production other examples of our exploited activities to the financial sector where they move money to the bottom of the period. credit card practices, predatory lending. that would not make the economy more efficient. that would actually make it more unstable and paul volcker said not a single financial issues that led to the american economy except the atm machine. but that is the british invasion of.
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[laughter] >> with their raise my the from $1 above $3. [laughter] >> that is another example. taking advantage of the efficiencies of corporate government to reduce the corporate income note evidence there that much more productive and ceos of other parts of the world. but they are better at getting a larger share of the pie. but your economy half's to be more efficient is spent on their salaries. >> host: there roughly divides in about half the first was the legacy of the new deal with the era of
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corporations to see themselves as the coalition stakeholder with very strong labor union and the second arrow which this financial capitalism, a deregulation, and there is a widespread belief and they just know that transition led to the explosion and it made ever pretty better off. but that was not true. but that spread to the general population. my complaint about occupy
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face that fact cup to the owe it is 0.5%. [laughter] every group of the population was growing but the bard -- bottom was growing faster than the top. today it is not that way. gdp does not give a good measure so while the one-tenth of 1% has been doing very well median income is lower than it was and welfare is as low as it was two decades ago. all of the wealth has gone to the top. is clear in these ways the economy has been functioning
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from this period when we grow together to seven paul, you are one of the leading thinkers about international issues and we have seen tremendous fights in ohio over the rule of china. how do you see that? >> several different pieces. just coming back we used to have much higher privacy the and we do now. pro but what makes it so much harder? bided is a big drag on the
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economy. but it has gotten better. but u.s. competitive but that is how we have to work but they live with it dated not keeping up with reality. china is no longer the collor pro is a much broader set of questions not just try not negative chain but say but basically we're but the rest of us have this problem. [laughter] with that issue of trade and income inequality, we used to e*trade with it comes
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with the income distribution. it is just increased efficiency. but now countries that are substantially lower income and selling labor is such a product they can see any quality through a highly educated. the part of it is. i was writing papers 18 years ago. 17 years ago saying that needs to factor in a quality.
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but in canada there is a much bigger factor. what do they do about it? >> merck is nothing else because of global citizens. in the access to world markets it is critical. that has said decent society with a strong social safety net. >> host: it creates programs and to give people skills. with the open-market the country as a whole could be better off. but they never do.
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that is the problem. at the same time they talk about the wonders of globalization and it was the social safety net. >> germany is doing relatively well in this crisis. then they discover they have problems. is amazing as an icon. why is germany able to export so well? they pay very high wages compared to our standards
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and extensive welfare state but among other things close collaboration between the educational system and industry, a corporate governance that is much more like we used to have. rate -- labor is represented on the board. do you want to be a high-wage country? you want to move in the opposite direction. >> and actually the scandinavia and have done much better and a grown faster and to be more subtle but looking at the abstract
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but to think that is how economics works here, they cannot possibly the servite -- survive. but have you been to stockholm? you know, the things of the right direction but they have not kept up with the scandinavian countries. now 30 years ago they were in the middle of the industrial countries, i'm term eight -- and mean germany. sorry. not as good as scandinavia
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but they've now moved to the metal proto larger extent in the quality is not just market forces. with germany and the uk we shape the market forces. the way we do has resulted in the most in a quality of property -- opportunity. it is merely a myth. just like the united states but scandinavia has kept up
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but it is the most opportunity the less inequalities. >> the old the global economy and methane you can do better to have the secret society as of what i get all the time. but they managed to might -- maintain a high-level but with the high productivity you do not have to be common even in canada is a much less harsh society and operating this aim environment we are.
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so these are choices. how we run markets the distribution is not god-given. and choice about what you do after words to provide deason support, educational system that is well-founded everyboby but if you have a tax system like ours where spicule is overtaxed for fraction but to keep the money and a big take-out you
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have incentives, , those rules if people with lower tax breaks but you have more speculation, more instability and the money is the ninth 10 negative cayman end says a recent and the phone keep their money and and from the financial industry someone tried to talk about carried interest but it is still taxed at the 15% but there is a lot of effort put in when uncertainty arrives but i cannot help but say you know, what else helps to solve it? writing books. [laughter] and somehow i don't get the tax break and here we are.
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[laughter] >> host: just to clarify the question of carried interest, when a hedge fund earns money from their customers they know the fee, that is there and come. they can defer that. to keep it invested then on any gain you pay capital gains but now they have transformed that. [applause] >> conditions of a former head fund manager. [laughter] health care. the phrase used tallyman did to our markets.
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one of the most why doesn't it work. >> whether read it is then all of the text books. the market zero shows the fishery. >> >> the assumption that the buyers understand what they're providing and what
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it ken did it go most 60 years ago, he said if you may list of these things and the way markets can fail, the paradigm does not apply. every single one that they are a good way to organize. people may have a better notion. realize you cannot have health care costs. >> so already you have to rely on a certain party payers which will be a big problem for efficiency. a situation where people may know more about their health condition but the deal with
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the issues themselves are highly technical and you cannot know if your doctor is recommending the right thing. as a patient. we actually talk about health care consumers. i am not consuming health care. i am a patient for pro and then to be rushed into the emergency room with a heart attack. [laughter] and a lot of the things we did in health care were be expected that from doctors but not used cars salesman.
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if they mislead you they will not kill you. what has happened is health care have been sick go where free-market principles does not apply. but the markets would lead will as you can see the efficiency of his although by circumstances he improved underdress. if anybody talks about the wonders of the free-market free-market, he shielded added smith and also understood he was only right
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under very restrictive conditions. in the health care sector was never right. and my on were put the reason the invisible hand sphinxes invisible is it is not there. [laughter] but just to add them with follow the same system on outbidding better results. >> breaking face seven.
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>> daewoo cotte talk a run across control and the more successful ad. >> of veterans health administration actually a the doctors are government employees. >> you did a calculation showing if we had a health care system that was as efficient we would have no deficit given the baby boom. >> >> it is actually called medicare.
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with the supreme act the of of, so all of these same of, so all of these same this but our budget problems will be done.
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>> cell it better dismantle. it is incredible. it is a rejection of theory and evidence. [laughter] that is pretty impressive. >> host: look at the interface between medical costs and the budget. the idea we have to have commissions like bowles simpson with the shares between spending and so forth. why don't we look at that in the eye? >> the riyal abbate of merck can -- american. the insurance industry is very influential.
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if you take one provision but to provide for egyptian dragon's for medicare. >> if anybody is serious about but we are they talked about i think health care
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reform should. medicare for all is where we should go broke teach teetwenty three. we had this plan is in an good to get to the effects of the single carrier system we should have a public option. then the public our action is killed. >> but right now is to establish the principle of universal health care then there is the pressure spread of first.
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>> those who were not insured. >> they are playing an awfully prices. >> the amazing thing the uninsured are. >> the other aspect is that in the end. >> with the complicated accounting things. we have such the inefficient health care system.
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>> and is not really a big budget. >> they could pay with relatively modest cost and a little bit of extra after-tax asian and then we are balanced. that the health reform bill. >> but if the is reelected to have the committee of civilizations but sarkozy
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came to columbia to give a talk at the time about the health care bill. list events asked him to accommodate. but edo what to. >> they should have access to health care. this is a question of the right and left.
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>> if you ever been treated it is the hell hole an possessor but if we get it it will be irreversible. >> this is like medicare. >> most americans think it is a good system. of the joke in the debate with obamacare is the person says keep the government hands-off of medicare. but to find out what is the
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role of government in society? for 30 years. >> is the problem. >> arithmetic here is successful it cannot be a government program. also social security. they find it difficult to believe the transaction cost as a fraction of many private insurance company providing annuities by providing insurance against inflation over. >> i think the deeper issues
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>> but the u.k. germany the united states and sweden they asked a battery of questions. minute states respondents distrusted government more than any other country. one question stood out to lie trust our government with the powerful interest? united states was 10 or 15 points higher with mistrust. >> that may be related to any quality. that we have such a high level of economic inequality inevitably it is translated to political. just like the rules of the
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economic game determine how the economics of some plays out. now we have political rules of the game like citizens united that we move closer to a system that $1/one-vote that is self reinforcing with more political inequality that generates four loss of regulation one example i could find astounding is the bankruptcy-law. nobody normally is interested. who gets paid first?
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of the derivatives. they put it in when nobody else was notice same. who pays attention to bankruptcy laws? so you encourage economic activity. student loans cannot be discharged. even in bankruptcy. the banks do well sell it has tuition going up the tests of the cutback of the state budget. and come is going down but the only way people can afford it is the borough then they get she did as a
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lot of them have been particularly with the for-profit private schools. the results is if you don't get a job with the recession it is a news around your neck. >> host: teachers. what ehud telling people looking at those tuition bills and unemployment? >> >> this is so rare is the 1% to the extent they're not coming from the 1% by getting generous scholarships. >> i certainly have relatives who are urging
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them to not be dependent and then nephew thank god teaching english and we're urging him to stay there until the job market is better but we move off the question of the current depressing economy but can we really afford to boost the economy? the cost of not is among a lost generation. yon people come out of school to the market that has no use for them. they never get started on the latter. we will be paying a price 30 years from now.
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>> and it is foolish the u.s. government can bar 11 negative interest-rate so bonds are protected against inflation. people pay the u.s. government to take their money. once you recognize the infrastructure and technology to have the feeling with the third-world country you realize they provide the basis with those kinds of investments is a
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problem with the private sector to promote growth in the future to improve our fiscal position because of these positive real returns in the negative real cost. anybody looking at the balance sheet? >> could greatest nation in the world links to all points west completed in the year 1910. as the longstanding project at 100% of capacity and the second tunnel has been cancelled. when the government could bar at the negative interest rate. incredible. >> and people are worried. >> larry summers and now he
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sounds a lot more and they had a paper making a strong persuasive case to spend more money now is a positive with economic growth will more than pay for itself because the borrowing cost is so low. yes. and cutting back actually were since the fiscal situation then you have to inflict more pain. is treating people by bleeding people then bled them some more. >> host: i am getting depressed. [laughter] let's turn to the audience.
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people have questions. there are microphones we have time for question. >> a fight could make the observation before my question and brian appreciate the opportunity to hear 3 billion people discuss issues. i suspect we had three equally distinguished panelists from another affiliation new in a different answers. do think the problems of the a & is a result of the 1%? is a problem than 99% results of the 1%? second, what is the appropriate maximum tax rate on in society.
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number three how would you narrative the differentials between the worker and the ceo. it was 30 times now today it is 500 times. it is incurred to some degree because china has brought down wages of the american factory workers i think ceo is the issue of governance. if you could give your opinions. >> the 1% cause the 99% status? >> the difficulties of the 99% are a result of a whole host of different things we have talked about. right now the major problem is unemployment, education
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unemployment, education, a host of financial sector deregulation and lolling predatory lending. you can say a lot is a result to support not by the 1% by the way the influence of money of the political process. it is a result of that. not all of it. but the issue of ceo pay relative to the ordinary workers, a lot of that has to do with corporate governance. if we had stronger was i think that would be curbed. >> is a different ratio here
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then another country. >> and safeguard just as efficient. >> also the labor movement. the middle question. 73%. a former colleague of mine and nobel laureate and unqualified to be on the federal reserve board, the government passed to take that exact number. there is a very strong economic argument that says we should be taxing very high end comes at rates that yield revenue to four.
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. . . .
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to actually generate income and improve economic efficiency, so most economists would say to the extent you could actually target those kinds of rents, that is as close to 100% as you can. >> i sense that if you had a higher rated the top you would discourage the pursuit of the? >> there is a fair bit of evidence, that one of the reasons why we have this explosion of the corporate pay, of executive pay, is the kind of riddle gaming of the system that ceos do in order to get these high paychecks. it wasn't worth doing when the tax rates are much higher. >> so it goes both ways, when you have more economic inequality the political process leads to less progressive taxation and more distended --
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distorted tax system but also when you have less progressive taxation you wind up with an economic system with or inequality because people try to find it worthwhile to game the system. >> thank you. hello? so, there has been some criticism of the notion that economists as a group tend to look at the world as if the only thing that matters is efficiency and seeking so-called rational solution to problems of inefficiency and i'm getting this wrong sense that the two of you are not exactly in that camp and there is some sort of moral code that is at least in part underpinning your work and your views and i wonder if you could
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articulate what that moral code is, a code for economists to live by? >> well -- [laughter] i mean i don't think the moral code for a person is any different if you are an economist than anything else but no, let me answer a slightly different question which is what is your social position? what is it that you want to see and i don't know, joe would correct this but i think i am more or less eight role of this notion that you should think about society as if you were in society without knowing who you are going to be in it and he should think of it -- if i didn't know whether i was
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going to be born the son of a corporate executive or the son of a migrant worker, what kind of society what would i look for given it's really uncertain. and it's a little bit like a golden rule sort of thing. just consider the possibility of what would you want if you were going to be someone else? you don't have to be super formal about it, but i think that is actually a great line. one of our two presidential candidates has the social philosophy -- [inaudible] but anyway. >> let me just add one other thing. some of the arguments we have been talking about this evening, they say that no matter what your view about your moral philosophy is, that the level of inequality that we have achieved in the united states is that for
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almost all of us. that we have actually pushed the boundary beyond the point of where all of us in the way will separate. so we have thought about this in terms of our self-interest in the 1% talked about it in terms of self-interest they would realize. >> since one long-term study on education and socioeconomic study, i always think of it in this context. it turns out in america right now, they looked at students by test score and socioeconomic background and then track them for a number of years later and it turns out in america right now basically a rich kid is more likely to graduate college than a poor smart kid. that is telling you this is an enormous waste of human potential. that there are probably tens of millions of young americans who could be doing great things for themselves and for the rest of
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us who because we have such an unequal society are being denied the chance. >> that equality of opportunity where again we are performing the worst of any advanced -- >> the notion that you can divorce quality of results from quality of opportunity. and the results are so unequipped turns into a an equality opportunity as well. >> i was doing a joint venture with the union theological series. joe stiglitz discusses a month ago and we will continuing that in filming out for our web site. the gentleman who asked the question i would like to speak to you afterwards and get you an invitation to the next session which is george -- talking about member identity. >> as i look at the last decade i see the debt run up under the
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bush administration is a comparable amount under the obama administration. this seems to me to be a legacy of an extraordinary amount of. [inaudible] and yet we have a lot of economic problems and now our sovereign debt is roughly around gdp and this is the point in which at least in europe, investors have begun questioning it so i am curious in what way future funding would be posed as a solution to problems that the past was not and how can it be financed? >> sorry, i don't buy the premise first of all. [applause] look, we had a stimulus bill, which was about $800 billion.
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that is a very small part of the debt we have and none of the results of an economic stimulus so where's this coming from? the rest of it is, we have a large amount of debt or a large amount of -- we ran a deficit even during the good years which people like myself don't think was a good idea. why? because we first wanted to give tax cuts to langsam individuals and have a couple of unfunded wars. that has nothing to do is pump grinding and then we had a collapse of revenue that took place after 2007 which is the result of a severe downturn in the financial crisis which was at least in part, at least in part, financial deregulation. you need to actually have some oversight in the financial system and all of that. so the notion that we have our
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current level of debt through change in policies. we got to our current level of debt or a combination of more or less deliberate policy of starving the beast when the economy didn't need a budget deficit coupled with financial policies that help create this economic crisis. all of that said, the notion that bad things happen, that there are some red line on debt that we are somewhere close to is just not ward out by the evidence. look at who is in trouble right now in terms of debt, and it turns out to be only countries that no longer have their own currencies and are a special problem. the advanced countries is to let their own currency have repeated current events and historically been able to handle debt levels
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like we have her co. >> it's if ali -- fallacy. [inaudible] >> it's very important. there's a wonderful book although there are some mistakes but after the book they throughout this casual paper which was just some raw correlation saying that countries with high debt seem to have low growth and as you look at it looks like it's the other way round. countries who have slow growth and up with high debt. >> the united states have a dead to gdp ratio of 130% of the end of world war ii and was followed by the highest period of economic growth that we had only brought the debt down relatively quickly. so this notion that there is a magic number which is the
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problem, it's just false. the counter facts, to the person asked the question, what would have happened -- [inaudible] >> one of them will say that's a really good question. what would have happened if we hadn't allowed the deficit to increase and when you try to tear -- do the herbert hoover kind of policy slash, cut back expenditures and revenue went down. we did that experiment. the ecb and europe have been forcing out on greece. we saw two things about that. one, it was led to historic oppression and the other was the deficit doesn't get down as much as anybody hopes.
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i am surprised that they are surprised. because it was perfectly anticipated that they would fail. >> thank you for the opportunity for asking this question. my question is on a different topic, but it relates to the kind of economic ideas that some u.s. groups have been promoting abroad. i'm an international student from georgia and the summer i went back and went to an economics camp which surprisingly was funded by the tea party organization and they were promoting libertarianism among georgia students. there has been an emergence of orthodox economists back home, which has led to deregulation, less taxes but also an increase of inequality. so my question is, how do you discuss alternatives to market fundamentalism in post-soviet
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countries that are so sensitive to the historical -- >> i missed the country? >> georgia. >> part of you know, it's not a surprise that people in countries where there was excessive government intervention like communism would react by going to the other extreme. so that i am not surprised, but hopefully, and in particular, from one orthodoxy of fundamentalism to another kind of orthodoxy fundamentalism. and i hope that one of the things that i'm trying to do is to try to say fundamentalism doesn't work just like the kind of marxism doesn't work. you need to have a balanced role coupled with the things we have
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been talking about are some for some of those roles in government. we don't have to pick up paul's book and we don't have to accept just secession. libertarians would just save just let the market work and there are people who have said that. don't do anything. just let it -- the ashes burn. there was one in "the new york times" has that said this from chicago. just let the markets have their way and they will all collapse in out of the ashes will, new economy. you know meanwhile there's a lot of suffering. >> you are showing your age and mind. >> yeah, a few things to say. it's a little bit neurobut we have now been, we are now almost five years into this crisis and
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different economic ideas, people have made predictions. not so much to gdp but how things will work. there were predictions. there was a large belief to an half years ago that the austerity programs would actually expand the economy. we now have pretty clear evidence that does not work that way. we have you know, different economic doctrines have in a lot of ways been subjected to defense and it then send what has survived is, what has worked is an economic view, view of how these things work and that does support the case for government intervention. so it's not just let's have the abstract and sybil's and throw them out her co you have to look at what was worth the practice and it's not the libertarians market fundamentalists view. >> there's one aspect that picks up on a point we mentioned a little bit earlier.
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the standard doctrines of the libertarian is more flexible wages, no unions. the economy is going to perform better and the countries in which they have stronger unions and better job protection have done better in responding to the crisis. the united states, which is the best country in terms of labor market possibilities hasn't am not well. it's another experiment and what's interesting from the point of view of economics and the economic theory, this crisis has been wonderful. we have gotten a lot of experiments and we will be able to make a lot of different hypotheses and it's shedding a lot of light on a lot of different issues, at a big cost to a lot of people and a lot of these countries.
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>> the this is a question addressed to both of you. what is your view on the theory of subject is futility in academic economics? does it describe reality? especially considering your experiences in international economics and asymmetric integration -- -- intervention -- [inaudible] >> wow. [laughter] >> why don't you try, paul? [laughter] >> we had a lot of economics built around the notion of this idealized rational man who has utility, as really a clear
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ordering of preferences and sometimes can be expressed with a mathematical function and makes rational decisions given all of that which is obviously not a literal description of anybody. it's a metaphor that is hopeful for organizing about how decisions are made and i think the way to do it is to always, always think about it in the subject of. if it were the case of people were like that would offer some guidance about how they would behave. any congress who believes that they expected a utility model decision-making of uncertainty is a literal description of how people make decisions and probably should find another profession. but it nonetheless is very useful. >> let me say, there are two parts of the question. one of them is, there is a lot
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of research over the last 30 years that shows that people's behavior in making decisions under certainty is not well described by the model that paul, you mentioned that there are significant deviations for behavior from me prediction of that model. on the other hand, when we think about the issue of where the probability distributions come from? are they objective or are they subjective? the view that we ought to think of them as relatively subjectivt our experiences and the way we see the world based on our
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experience. i think that has a lot of persuasion to the extent that we use those probabilities and we behave according to them. then the subjective probability approach doesn't make a lot of sense. >> one more question over here. zvi hi. thanks for coming. as the panel discussed earlier the united states was able to get out of the great depression by government spending because of world war ii and on manufacturing in a large sense but currently we are already at war in the manufacturing landscape in the united states is drastically different than it was 70 years ago. in light of those two points, where would you direct this government spending? >> okay, this is actually how i concluded. let me start -- the good news is that there are
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some, there are some natural recuperative forces already at work. if you look, people build few houses in this country for six years now so there was no excess housing stock probably. we would probably have a housing shortage and you can see housing is starting to come back. household debt is down. it's still high by historical levels but not as much. there's a lot of reason to think that the economy is somewhat on the mend and if you look at the last year you will see an improvement in labor markets, so the point is that the hill of beans that needs to be kline does not as steep as it was. you don't have a world war ii level stimulus to get us back to a much better economic position and a lot of it can be achieved
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by reversing this austerity that we have in fact carried out. joe nye both, we are down 600,000 government jobs when we should be up by normal growth, we should be up more than 1 million. so right there you create a lot -- you can create a rackley 1.6, 1.7 million jobs including direct effects probably 2.5 million or more just by basically restoring normal lovers -- levels of funding for schools, for road construction for road repair or the functions of government that we are to have her co we don't need to find exotic projects. we don't need to find something to spend on. just returning to where we would be under normal operations gets us with an employment rate well below 7% so it's not hard. >> i think to get back to really
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full employment, we will need to do more than that. if you look at that say comparison to where we were in 2007 and where we are likely to be, we won't have real estate anything like we had before because we were rationally exuberant. we won't have consumption like we had before at zero savings rate, whether it is 4.5, five, six, it will still be well above where we were. and we are going to continue to have the problem of the trade deficit unless things change very dramatically. so, the good news is that we have lots of things that we need to invest in. infrastructure, retrofitting the economy for global warning -- global warming. in my mind, particularly things
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we can borrow at make it of interest rates, we don't need need to do anything exotic. there is really -- let me make another important point. this flaw that business view that it was more spending that got us out. war spending is not any different than any other kind of spending except in one way. you don't have have a thing left over when you drop those bombs whereas if you actually build roads, you have something left over. so, even if you don't do it perfectly, it's better than the war spending. but the fact is that all of this kind of spending would actually put us in a better place than the spending we had to do in world war ii. >> okay, we are short on time here. my staff begged me.
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they said you have to let the great original thinkers and no bill laureates on stage with you and rob, give them that we'll. the last question of new economic thinking. what new economic thinking do you think we should pursue, develop and enhance and the question is for each one of you. >> well, part of the problem is you want to ask the question of the younger guy. there is a problem of having been in it so long you have your own set way of thinking. but look, i think we need a lot more, a lot more empirical work and a lot more evidence. we are seeing a renaissance. we are actually seeing a lot of really good empirical work in fiscal policy, and partly
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because of it tends to be a live issue but also because we have this crippling orthodox of believing that everything must be derived from rational behavior of individuals and if you can't drive it that way then it must not exist. if we are looser jointed and more open-minded way of approaching how it works, then i think we open the door -- though i don't think were ready for a lot of -- but i think we have a good opportunity to have a lot of people looking at how we can actually work? what happens in a recession what happens in recovery and what happens when good standing is increased? we have a lot of natural experiments. bad times are good for generating interest and that is where i would go. history, there was this great line. two things.
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after attending a conference he said the new economic vision consists of a large part of reading old books which is true. the others yes, we have learned that history is a powerful tool and that in some ways -- there was a lot of empirical work in economics was being dictated by where the data we are using is easy to get but it turns out that a lot of the interest is going further back. international, we are better about this but particularly in this country there's a tendency to do economic research as if america was the only country and the fact of the matter is there are a lot of -- principles dues tend to stay the same across time and across
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space, not everywhere but you can learn a lot. if we had paid more attention, if we had paid more attention to japan and the experiences in the '90s we wouldn't be doing such a bad job here right now. >> i don't know where to begin. [laughter] we have only a limited amount of time and it would take a couple of hours to really talk about a new economic thinking. the point where i agree strongly with paul is there needs to be more openness in the way that economics is approached. i am not sure whether the really relevant focus ought to be on him.. a lot of the problem is really was brought to bear in seeing the world that led them to look at the world through the wrong
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empirical lens. so, for 25 years, 30 years, there has been a lot of empirical work in economics, driven with with the view that markets are rational, everybody is rational, so you have this very strong winds and anything that was outside of that land somehow they couldn't see and they shaped all although the imperatives into that frame. even today there is a professor at harvard even after the crisis saying that there is this notion of expansionary contraction, that somehow austerity means economic growth in a number of instances. >> that is why we have had --
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nobody believes that anymore because they actually look hard at the evidence. but yeah we learned something there. >> it seems to me what is really important is changing the mindset with which we approach the data and the way we see the world. within the different views of economics it seems to be very clear the view that is done miserably as macroeconomics and monetary economics and somewhat a lesser extent of financial economics. these were fields were macroeconomics had the view that locals don't exist, that markets are efficient and it was really the central doctrine of the very large fraction of the macroeconomics of the profession. they actually had models used by central banks in which there were no banks.
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you might say that's really peculiar. how can a central bank actually talk about macroeconomics without banks? well, they did. and their predictions were very bad and they would respond to the crisis once it happened. it was not very good and when it happened they would say don't worry, the crisis is continuing when it obviously wasn't. so in my mind as we look across the field, the big failure was when -- in macroeconomics and finance in these financial markets, we have all these efficient properties and a lot of people actually believe those models. that was really the big mistake. both in the public and the private sector and with an enormous consequence. >> get, the odd thing is if you
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had a view of macroeconomics based on why the accepted knowledge before this super rational expectation think a man, that kind of thing, it's actually done spectacularly well in this crisis. it actually, obviously i think of myself as one of the people that did that but these things that seemed absurd to a lot of people. the notion that they budget deficits would not rise -- drive up interest rates and dig increases in the anatiere base would not be inflationary and this would be a slower recovery than normal because we'd be up against a zero interest rate. the propositions which have turned out in a funny way of period of time for members of economic theory except the macroeconomic theory even though it was still perfectly balanced. >> and you mentioned economic
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history. the notion that there were no bubbles was really quite remarkable because anybody who has read it as i have, one of my teachers was charlie who wrote about the history of panics. >> panics and crashes. >> happened with the beginning of capitalism and one of the things that was so interesting in this book, you described in each of these bubbles, each of these booms that the people in the blooms new that there had been a previous bubble that rogue. they thought they were smarter than their parents and they themselves were not in one of these bubbles. and that was exactly what happened in this case, that a few of the people in the middle of the bubble said yes, of course back in the middle ages 20 years ago we had bubbles that
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we are so much smarter than our parents and their grandparents our grandparents and their great-grandparents so we would never fall for the kind of thing that they feel for but of course the things that they fell for were a little more complicated but in many ways very similar to the same kinds of traps they held us to. bernie madoff all the way to more sophisticated things. >> i will ask this concluding question. the notion that we should try to inoculate people from positions, that they only see what they believe, we should try to bring them back to believe that which they see. >> yeah. it's a little bit of humility here is that it's a very powerful thing. you can see what a humble person
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i i am and joe too. something that maybe, maybe we don't have the truth with a capital t, that maybe the beautiful models that you have been teaching are not the only way to see the world. we have this tremendous doctrinaireness about macroeconomics. amazing, without any historical triumphs to justify it and it's a little arrogant. >> was quite remarkable is that some of the other kids of those models have actually written that this is the era, even now, of the china of macroeconomics. so what it shows is that some parts of economics are immune to
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reality and they are a religion, not a science. hopefully inet will be able to make a dent in that. >> and those people will never admit that they were wrong. but i am reading about, for light reading the development of the quantum theory. been. [inaudible] [laughter] [applause] >> i think tonight you have brought a lot of light to this audience to the questions of economics and the challenge of inet and i'm grateful to you both for this discussion. thank you all for tuning in. [applause]
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>> if we turn away from the needs of others, we align ourselves with those which are bringing about the suffering. >> 1/2 of the bully pulpit and you ought to take advantage of the. >> op seeking this country is nothing short of a public health crisis. >> so much influence in that office. it would just be a shame to
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waste it. >> i think they serve as a window on the past to what's going on with american women. >> she becomes a cheap confidant. she is really and away the only one in the world he can trust. >> many of the women who were fought first ladies, a lot of them were writers. they wrote books. >> they were in many cases quite frankly more interesting as human beings and their husbands if only because they are not first and foremost defined by political ambition. >> deli with both socially adept and politically savvy. >> dolley madison loved every minute of it. monroe hated it, absolutely hated it. >> you can rule without including what women want and what women have to contribute. >> during the statement you are a little breathless and there is too much looking down and i
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think it was a little too fast. a change of pace. >> probably the most tragic of all of our first ladies. >> she later wrote in her memoir, she said i myself never made any decisions. i only decided what was important and when to present it to my husband. now you stop and think about how much power that is, it's a lot of power. >> prior to the battle against cancer, is to fight the fear that accompanies the disease. >> she transformed the way we look at these bugaboos and made it possible for countless people to survive and to flourish as a result. i don't know how many presidents have that kind of impact on the
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way we live our lives. >> just walking around the white house grounds, i am constantly reminded about all of the people who have lived there before and particularly all of the women. >> first ladies, influence and image, a new series on c-span produced in cooperation with the white house historical association coming in february 2013. >> novelist james patterson is speaking at the miami book fair and he talked about the reading program that he has personally started. we wanted to look at some of the other reading programs that are available in the united states and see what their efforts are. i want to begin with jane robinson, the chief financial officer of a group called first book. ms. robinson if you could describe what first book is to start? >> hi peter. i just want to say thank you to
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c-span for all of the incredible support you have given to these higher industries and the entire concept of reading and literacy. c-span has been a leader on that and it's wonderful to salute you. first book is a nonprofit. it provides hooks and educational materials to programs, classrooms serving kids and needs across the united states. >> how did you get started and where do you get your funding from? >> we started 20 years ago. in fact we are celebrating our 100 millionth book distributed we started 20 years ago at martha's table in washington d.c.. we have distributed more and more as years have gone by because we have started newer
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models. especially in recent years we have distributed probably 10 million or 11 million a year. we support programs across the united states and now over 40,000. our funding comes from a lots of it comes from corporate marketing campaigns that we do as well as individual donors and some foundations. we also created a generating model which is -- [inaudible] >> ms. robinson, is there a special focus for first book? you can do the preschoolers or do you work with the classrooms are what? >> is a great question. first book has built a pipeline of support for all programs serving kids in need, all classrooms serving kids in need and reading is fundamentally a good example. we have over 1900 fundamental
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programs supported by first book as well as over 40,000 others. so head start, after-school programs, mentoring, kid zero to 18 are supported by first books. >> jane robinson mentioned reading is fundamental and we are joined by carol hampton rasco. gives the background if you would miss rasco on reading is fundamental. >> 46 years ago margie met merra and bob macnamara who was in the cabinet, she went to a meeting with jacqueline kennedy called at the white house of all cabinet spouses and mrs. kennedy had told each spouse, we are each going to do something to make washington a better place for the people who live and work here every day. and mrs. macnamara had a great reputation as a reading tutor.
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she tutored the wealthier children in town and she tutored children from very poor economic graph -- backgrounds. she had found how much it meant to the three boys she was tutoring at a public school, to be given up look she had brought that her children had years before and had been left at home of course. she wanted them to take a book home. one of the mothers came to the school the next day and returned the stolen book. i said no, we want the child to have a book and that started a tradition where we might present a book to a child and helping the child write the name. we do not pretend to be the teacher of reading. we are here to help children, particularly those most at risk and not learning to read well and that usually means poor
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children. we are here to help them find the joy of reading, first putting that book in their hands that they have chosen and write the name in it and over recent years we have really tried to begin to stress even more the parental involvement that needs to happen with that look if it's going to, life. we have undergone a transition in the last year. 46-year-old and for the last 34 years we have had launched a several book brands that were not funded in fy12 budget. so we are now doing the kinds of things we probably should have done even more of in collaborations with their friends at -- books and we are stepping private fundraising of. >> the two organizations and
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carol rasco if you would start, do you see yourself as competitors, collaborators? >> we see ourselves as collaborators. we get asked that question all the time about our competitors. as jane as already mentioned we have a particular number who purchase their book from the marketplace that she mentioned. but we have always looked for all kinds of ways to be able to collaborate and when the federal grant went away, we put together a wonderful proposal and came to rest with this proposal to allow us to purchase books from them in a manner that would really allow us to purchase about 200,000 more books than we would normally get for the same dollar spent elsewhere. so we are very excited that we are going to be giving 1 million
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box over the next several months and we are at this very moment starting the first distribution. we are focusing much of our work this year on out of school time when children are out of school brega winter holidays, spring break and summer and we are going back. we will produce activity sheets that will go home with these books in this out of school time with the hope that there there are other groups that we serve that the parents will getting gauged with reading with the child in out of school time. so there's a lot of excitement. >> jane robinson. >> yes, carol is exactly right. we are collaborators. carol carol is a fantastic
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educator and lead it for a long time. not too long carol, of course. but you know first books has built the supply pipeline that supports programs like reading is fundamental and many others and it does fantastic work. our primary model has been to build the logistics that provide tremendous access for programs and classrooms serving students in need, because that was a huge -- when our founders found it first book 20 years ago. kyle zimmer is a great friend and volunteering at martha's table here in washington d.c. and realized that he here were heroes, local heroes supporting the kids who needed help the
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most in an environment that was work for hours and hours a day and they were absolutely without resources, just boxes of kranz. if they were beyond the programs like wic at that time in many many were so what we realized was we can certainly solve one problem. we can build the pipeline to get great resources to them. programs like risks and others are increasingly devoted to what kind of content is on -- is available through these programs and how they do that in the classroom. we consider ourselves soldiers in the same war, taking on that challenge and expanding beyond what we have reached so far so we can get completely across the united states and beyond the
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fantastic resources. >> jane robinson do you work with the public library's? >> we do. we like to be sure that we get brand-new books that are chosen by the administrators and teachers. that is our primary focus that we but we absolutely have worked with our corporate partners to supply school libraries with brand-new books and we have had multiple initiatives that focus on really replenishing libraries and as a matter fact right now in response to hurricane sandy's devastation, we have got a web site and we are working with partners to raise funds to purchase terrific replacements for libraries in the new york and new jersey area. >> carol rasco have you moved into the e-book world that all?
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>> well, not in a big way yet, but we have certainly been exploring it and we don't discourage it. many of the schools and children we serve the most have not had access to the piece of equipment, and so we have been looking at how can we promote that in addition to wanting children to have books and get them engaged. we know that the e-book is a great way to do that for many children. i above all to not want to look back 10 years from now and say oh my goodness we let another digital divide occur so we want to make that the children we are serving have the opportunity to learn how to use the e-book and what is there and what it can mean to them. so we know our friends at first
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book are working on that kind of thing and i can't fail to think in another year or two that will probably be a project that we are doing together. >> jane robinson are you working on e-books? >> we are. we are working on a digital platform so that we can -- limitations for these kids. if anyone is confused about the divide, let me bury her sure everyone that there is a horrible gap in this country. 32%, and that is not a misstatement, 42% of the kids in the united states are from low-income families. that means they simply don't have the kind of access for educational resources and looks that children means have. that is a lot of kids. it's over 30 million kids. if we are going to bridge that gap or divided or whatever you want to call it, we have got to
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fill the substantial system that can affordably get those terrific resources. that doesn't mean books are going away but it means that digital content, digital devices and the terrific research and learning for people like the john hans kuni center, all of these resources have got to be brought to what is called the economic pyramid. there is the base of the economic paramedic here in the united states too and we have got to bridge that. that is what first book aims to do and as carol said we have got a large plan to get a digital platform belts and we are about to do that, working hand-in-hand with terrific organizations. >> carol rasco, former first lady barbara bush and laura bush made reading one of their signature issues when they were
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in the white house. do you see a difference in support when something like that happens with that high-profile? >> well, we certainly do and griff is fortunate to have both first ladies on their committee until they went into the white house when they were forced to get off. the visibility that each brought with them to the white house, whether they was -- were still serving on the official border committee was extremely helpful. so it is certainly a big help when people like that in those positions of power are helping people see that there really are children out there who do not have a single look in the home, except, and that we hear most often when we talk to children
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of lesser economic means, we say do you have a book at home and we have never asked that. the same common things we have heard through the years are, my mother has a book wrapped up that she keeps in a drawer and when you talk to them you realize it's the family bible which is very special and the children realize that or they will talk about the book with the yellow paper and of course that yellow paper -- so i think it's very difficult for those of us that always had all the books we could have ever wanted whether owning them are going to the library frequently as i did in a small town in southern arkansas. i went twice a day during the summer. i loves to read but it's hard for us to believe that there are no books were a home and a child and the child lives too far from the library to walk, fitting the
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library into a family schedule when there is little free time perhaps no transportation or they cannot afford it, that is difficult. so it is again critical that we believe the things we are being told, that these children are in need of one of the most basic things that most children get early in life and that his books. >> jane robinson, you have 60 seconds to make a pitch to somebody who may give your organization money and to a parent. what is your pitch? >> i think the pitch is, believe us, there is a gap in the united states. we have got to provide heroes who are serving in kids in need with the resources that they need. we are losing geniuses because they are not given the educational tools or the books that they need to make their
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imagination spring to life and have a rich and full life. this is a workforce issue, health care issue and it's a citizenry issue. we have got to enrich from the bottom up so that kids know they have a chance to make a new life for themselves. >> carol rasco, what is your pitch? >> we have children entering the schoolhouse doors that are already so far behind their peers, with one simple set of figures i often use based on the very good study that was done a number of years ago and we have had kindergarten children entering the school who were from welfare families that had a vocabulary of 3000 words. that sounds like a lot of words for a child however children from upper middle income families have the vocabulary of
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20,000 words. that is a huge gap, and an porch nightly in this country, we never closed that gap. so we need to start early and then we need to be ready to really forward the resources that jane they jane discussed into the earliest years of children being in a school setting where we can try to reach them best. >> carol rasco is president and ceo of reading is fundamental. ms. rasco what is your web site very quickly? >> rif.org. >> and jane robinson as chief financial officer of first book and what is that web site? >> first book.org. first, written out. >> we thank you both for being on booktv and talking about your reading programs. >> thank you. >> thank you.